Friday, February 12, 2010

Pros/Cons of Combining Treasurers/Comptroller's Office

Judy Topinka served three consecutive terms as state treasurer then lost in the race for governor against Blagojevich in 2006. Part of her platform involves a push for combining the positions of comptroller and treasurer to save what she presumes to be $20 million yearly. The idea isn’t completely out there — New York only has a comptroller and no treasurer — but it would involve a legislative amendment. She is the Republican candidate endorsed by the Tribune.

This appeals to the fiscally conservative wave that's likely to sweep the nation and even the state of Illinois come November. The idea has some merits. Combining the two offices will cut about $20 million from the state's budget. That's not a typical political cut where you merely slow down the increase in spending. This would a real and tangible cut.

Still, the issue is more complicated than that. To understand the complexity of the issue, first everyone must define what the offices of State Comptroller and Treasurer do. The State's Treasurer invests and manages the states' monies. Meanwhile, the Comptroller is the financial watchdog for the state.

So, in effect, the two offices are in tension with each other. When I was a stock broker, there was a similar relationship. All investment firms had something called the compliance department. Compliance made sure that all trades were done properly and according to all rules and regulations. Now, imagine if the broker were in charge of their own compliance. If they were their own watchdog, there wouldn't be much of a watchdog.

That's sort of the equivalent of combining the Treasurer's and Comptroller's office. The same office that manages and invests the money would be in charge of being a watchdog on the same management and investments.